* Liberty sued Vivendi in 2003 over 2001 USA Network deal
* Liberty accused Vivendi of fraud, breach of contract
* Vivendi contests verdict, says will appeal
By Basil Katz
NEW YORK, June 25 (Reuters) - A U.S. federal jury found on Monday that French entertainment group Vivendi must pay $954.6 million in damages to Liberty Media Corp in a 2003 breach of contract lawsuit.
The Manhattan federal court jury found that U.S. cable operator Liberty Media was entitled to 765 million euros in damages after it sued Vivendi accusing it of fraud in a 2001 agreement where Liberty Media swapped its stock in the USA Network in exchange for a stake in Vivendi.
The four-week trial was overseen by U.S. District Judge Shira Scheindlin. The jury voted against Vivendi on one breach of contract and one fraud claim, Liberty Media attorney Michael Calhoon said.
Vivendi in a statement on Monday said it "strongly disagrees" with the verdict.
"Vivendi believes that there are many grounds for appeal and continues to believe strongly that it did nothing wrong and will continue to vigorously defend itself in any subsequent appellant proceedings," Vivendi said.
Vivendi bought the USA Network in 2001 in a deal worth at least $10.3 billion as part of then Chairman and Chief Executive Jean-Marie Messier's plan to transform Vivendi from a utilities firm into one of the world's largest media companies.
As part of the deal, Vivendi gave billionaire John Malone's Liberty 32 million treasury shares in exchange for part of its stake in USA Network and another 5.2 million shares for its holding in a European cable joint venture with Vivendi.
"Liberty is very gratified by the jury verdict and that the jury has found that Vivendi should live up to its contract," Calhoon said.
In a statement on Monday, Englewood, Colorado-based Liberty Media Corp said that although the money award would not be final until the judge rules on other issues, the company expects the judge to uphold the verdict if Vivendi seeks to challenge it.
"Liberty is confident that the court will deny that request and that the jury's decision will stand," Liberty said.
The case is Liberty Media v. Vivendi Universal, U.S. District Court for the Southern District of New York, No 03-2175.